Nike announces layoffs to focus on growth areas

The firm said late Thursday that Nike is cutting 2% of its existing workforce, or over 1,500 jobs, as part of a broader restructuring.

Nike, headquartered in Beaverton, Oregon, revealed plans for layoffs as part of a strategy to reallocate capital towards key growth segments, including running, women’s products, and the Jordan brand. 

CEO John Donahoe emphasized the need to reignite growth and acknowledged accountability for the company’s current performance.

Phased Approach to Layoffs

The layoffs will occur in two phases, with the first round starting immediately and the second phase concluding by the end of Nike’s fiscal fourth quarter in May. Adjustments in Nike’s EMEA region will adhere to local labor regulations.

Focus on Growth Amid Economic Uncertainty

The decision comes amid consumer caution in spending and anticipations of reduced demand for discretionary items like apparel and footwear. Nike aims to streamline operations and optimize efficiency in response to market dynamics.

Restructuring Plan and Cost-Cutting Measures

In December, Nike announced a comprehensive restructuring plan targeting cost reductions of $2 billion over three years. Strategies include simplifying product offerings, increasing automation, organizational streamlining, and leveraging scale for greater efficiency.

Recent Layoffs and Broader Restructuring

Reports indicate Nike had been quietly implementing layoffs across various divisions in preparation for a broader restructuring. Departments affected included recruitment, sourcing, brand, engineering, human resources, and innovation.

Analyst Reaction and Market Outlook

In response to sluggish consumer demand and competition, Oppenheimer downgraded Nike’s rating to perform and adjusted its price target downwards. The market awaits further developments as Nike navigates through evolving industry challenges.